Fastenal Company (NASDAQ: FAST) reported a 3% decline in earnings for the second quarter of fiscal 2019 due to the impacts of customer and product mix as well as higher income tax expenses. The results missed analysts’ expectations.
Net income decreased 3% to $204.6 million or $0.36 per share. Adjusting for the one-time tax item, earnings would have grown 1.5% over the prior-year period.
However, net sales increased 8% to $1.37 billion, with daily sales growing 8% to $21.4 million. The increase in net sales was driven by higher unit sales related primarily to its growth drivers, most notably contribution from industrial vending, Onsite locations, and construction, as well as higher underlying market demand.
Looking ahead into fiscal 2019, Fastenal continues to expect net capital expendiures to be within a range of $195 million to $225 million, a growth of 16.9% to 34.9% from the previous year. This increase is a result of higher spending for property and equipment to expand our hub capacity, vending devices, and hub vehicles, with its investments in hub capacity likely to be the primary determinant of where it fall within range.
For 2019, Fastenal expects vending device signings at 23,000-25,000 units, and Onsite signings of 375-400.
For the second quarter, the company did see slowing relative to activity levels experienced in the previous quarter despite general economic activity remaining positive. A lesser contributor to sales growth in the second quarter was higher product pricing as a result of increases implemented in late 2018 and early 2019 to mitigate the impacts of general and tariff-related inflation in the marketplace.
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The company signed 5,439 industrial vending devices during the second quarter, with its installed device count at 85,871 on June 30, 2019, up 13% from a year ago. Fastenal also signed 94 new Onsite locations during the period. Fastenal had 1,026 active sites on June 30, 2019, up 35% year-over-year.
Fastenal signed 51 new national account contracts (defined as new customer accounts with a multi-site contract) in the second quarter of 2019, and revenues attributable to national account customers represented 53.3% of its total revenues in the period.
Shares of Fastenal ended Wednesday’s regular session down 1.01% at $31.25 on the Nasdaq. Following the earnings release, the stock fell over 5% in the premarket session.